About the Company
VST Tillers Tractors Ltd. was established in the year 1967 by the VST Group of companies, a well-known century-old business house in South India. VST Tillers Tractors Limited is engaged in the manufacturing of power tiller and tractor. The Company operates through the manufacturing and trading of agriculture machinery segment. Its products include rice transplanter, power reaper, engines, precision/auto components and agriculture implements. The group built its reputation through retailing of petroleum products and distribution of Automobiles in Karnataka and Tamil Nadu. VST Tillers Tractors Ltd. was promoted by VST Motors as a joint venture with Mitsubishi Heavy Industries Ltd, Japan. The company is now the largest manufacturer of Power Tillers in India. From the time of its inception in 1967 by the founder Managing Director, Sri V.T. Velu, the company has been growing steadily. Today, the VST family holds 51% of the equity in the listed company that has recorded consistent growth and has given excellent returns to its shareholders. With the growth in business, the manufacturing facility for Power tillers has been retained at Whitefield Road, Bangalore and the Tractors have been shifted to Hosur in Tamil Nadu. The manufacturing of key components for the engine for both Power Tiller and Tractor takes place in the Precision Components Division located in Mysore.
Agriculture is a significant sector of the Indian economy and over 70% of the country depends on it as their major source of income. Farmers are adopting modern agricultural technologies to increase farm yield due to the increase in demand for food supply. The agricultural machinery market is predicted to grow at a CAGR of nearly 8% during the forecast period to reach INR 769.2 bn by FY 2022. The growth of India's agriculture sector has also boosted the agricultural machinery market in India. India is the largest tractor market in the world and the 41-50 HP is the largest selling segment. It accounted for 44% of the total tractor sales in FY 2015. Tractors and power tillers have played a vital role in the overall development of agriculture in the country. The sale of tractors increased from 0.35 mn units in FY07 to 0.57 mn units in FY16, witnessing a growth at a CAGR of 5.5%. Sale of tillers increased at a CAGR of 7.8% to 48,882 units over FY07-16.
- Government initiatives such as Kisan Credit Card, National Mission on Agricultural Mechanization (NMAM), and Tractor Subsidy Scheme have contributed to the growth of the machinery market.
- Easy availability and access to low-cost credit is another reason for the growth in the market. This helps farmers invest in assets, obtain greater yield and income.
- Strong governmental regulations on the availability of finance for agricultural mechanization tools, rural development and high irrigation potential will drive the agricultural farm machinery industry in India.
VST manufactures VST Shakti 130 DI Power Tiller with 13 HP engine and VST Shakti VWH 120 Power Tiller with 9 HP engine. sale of tillers increased at a CAGR of 7.8 % to 48,882 units over FY07-16.
The VST-Shakti MT 180D Tractor with Rotary and EuroTrac -VST 180D Tractors have engine of 18.5 HP. The sale oftractors increased from0.35 million units in FY07 to 0.37 million units in FY16 with a growth of CAGR 5.5%.
Offices & Dealers
VST Tillers Tractors Ltd. has a network of about 230 dealers and 300 vendors all over India. Most of them are associated with the company over several decades.
- Karnataka - Bengaluru - Head Office, Power Tillers
- Tamil Nadu – Hosur, Tractors
- Karnataka – Mysuru, Precision / Auto Components
Some of the Dealers are:
- Uttar Pradesh - Ghaziabad
- Bihar - Patna
- Assam - Guwahati
- West Bengal - Kolkata
- Odisha - Cuttack
- Andhra Pradesh - Anantapur
- Andhra Pradesh - Ravulapalem
- Chhattisgarh - Bilaspur
- Madhya Pradesh - Bhopal
- Gujarat - Ganadevi
- Maharashtra - Kolhapur
The agricultural machinery market is expected to see an increase in market consolidation, as a result of the intense, competitive landscape. Therefore, to stay competitive, the leading players are increasingly striving to provide innovative, cost-effective and high-quality services, to the consumers within this market.
The top 5 vendors in the market are:
- Deere and Company
- Mahindra & Mahindra
Other prominent vendors in the market include AGCO, Beri Udyog, CLAAS, CNH, Daedong, Escorts Group, Foton Lovol, Kubota, KUHN, LEMKEN, McCormick and SAME DEUTZ-FAHR.
Total quantity of products sold during 2016-17 = #35,925
Total revenue in year 2016-17= Rs. 6,95,12,03,751
Break-up for Q2FY18-
Total revenue from tillers and tractors- Rs.186 crores
- This tractor would play in the niche segment competing with some of the well-known manufacturers.
- The company will manufacture these tractors in a phased manner.
- In the first batch, the fully imported tractors will be seeded into the market.
- In phase two, the company will localize most of the components and will be assembling the tractors in India.
- Launched two new tractor models in the market namely the VST Shakti VIRAAT plus and the 17 HP single cylinder tractor VST Shakti SAMRAAT. These two models will help to grow the volumes in 2017–2018
- In phase three, the company will also localize the engine, and at that time the tractor will be fully indigenized.
- In tiller, the company will be launching a new variant, and the pilot lots will be released in January
- Pilot lots of improved variant of self -propelled power reaper will be released in December.
- In tractors, the company is working on new product variants.
- Increased allocation towards Sales promotion and marketing expenses and focus on creating more brand consciousness in the market
- The company entered into a technology transfer agreement with Kukje Machinery for the manufacture of 5025R series of Branson brand tractors of 47 HP.
- Company launched the Samraat tractors and positioned its Viraat Plus which are going through volume production, both these models will help in gaining market share
- Company is a market leader in case of tillers with a market share of 62% in first six months of FY18 compared to 61% in the same period last year.
- The tractor volume growth is 22% for VST in the first six months compared to the compact industry growth of 14%
- Company is a dominant player in the sub 20-HP segment with a growth rate of more than 15%.
- Registered volume growth of 26% over last year in the compact segment while the industry growth was 1%.
- The company entered into an agreement with MTD and gained exclusive rights to distribute and sell power weeders in the country.
- The company plans to spend Rs.200 Crores additional investment in the next three to four year and have a five-year plan of over Rs.200 Crores
- Internal accruals itself will suffice for the next three-four years of Rs.200 Crores of deployment on company’s internal capex
- Out of the Rs.128 Crores company will spend, Rs.38 Crores to Rs.40 Crores would be towards infrastructure and rest would be towards product development
- Investment in infrastructure and machines is for the Mysuru plant and new plant in Malur
Recent Concall Summaries of VST Tillers